Boral chief executive officer Mike Kane.An uptick in residential housing construction, favourable weather and cost cutting helped Boral to a 73 per cent jump in half-year profit to $90.4 million.
Boral, which is Australia’s largest construction materials and building products group, reported higher earnings for all four of its divisions and a 4 per cent rise in revenue to $2.87 billion for the six months ended 31 December, 2013.
Investors will not be surprised by the numbers given Boral pre-released its $90 million earnings number two weeks ago to correct some low-ball earnings forecasts in the market.
Boral chief executive Mike Kane, who is been in the job for a little over a year, said the improved performance reflects the benefits of costs realignment and restructuring, together with higher volumes from major projects.
Mr Kane has cut 1,000 jobs, moved Boral’s head office from the Sydney CBD to North Sydney and overhauled his senior executive team in a bid to shake costs out of the business.
Boral said on Wednesday that cost-cutting delivered a $60 million benefit in the half-year and the company expects annualised savings of $130 million in fiscal 2014.
“Our focus on improving Boral’s return on funds employed through the ‘fix, execute, transform’ program is delivering tangible results,” Mr Kane said.
Favourable weather has seen Boral’s work on the mammoth Curtis Island LNG projects in Queensland pulled forward and earnings in the second-half are expected to be weaker as a result.
Boral’s building products divisions delivered a $23 million turnaround as residential housing construction rebounds in New South Wales and Western Australia.
Including significant items, Boral reported a net loss after tax of $26.3 million due to non-trading items associated with the $US1.6 billion joint venture the company has formed with Chicago-based plasterboard technology company USG Corp.
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